Timing of Amendment

[Guest Ted Kowalchuk, CFP, CFS,]

In Feb 2005, a MPP was merged into a PSP. The MPP plan formula used integration and the PSP didn't. The PSP has a non-integrated discretionary formula. It's now April 2006, and the client want's to use the integrated formula for this PSP for their 2005 allocation. Can this be done?

[jpod]

As is always the case, the documentation needs to be scrutinized, but it should provide the answer. However, all of this assumes that there was compliance with ERISA Section 204(h), if the MPP was a plan subject to Title I of ERISA. If there was no 204(h) compliance, you have bigger/different issues.

[Guest Ted Kowalchuk, CFP, CFS,]

As is always the case, the documentation needs to be scrutinized, but it should provide the answer. However, all of this assumes that there was compliance with ERISA Section 204(h), if the MPP was a plan subject to Title I of ERISA. If there was no 204(h) compliance, you have bigger/different issues.

ERISA 204(h) was complied with.

[austin3515]

I'd say you're SOL. From the gist of your post, it was the profit sharing allocation method that survived, and as such that's the method you're stuck with (of course, as has already been mentioned, the document has the answer). Assuming you have a last day rule, you could change for 2006.

[Guest mjb]

Has the employer made contributions to the PSP for 2005 at this time?

[Guest Pensions in Paradise]

Assuming its a calendar year plan it doesn't matter whether the 2005 contribution has been made or not. The allocation date would have been the last day of the plan year (at the latest), so they can't change the allocation formula after that point.

[Guest mjb]

You have a cite for your statement other than the EOB? How abut a primary source.

[Guest Pensions in Paradise]

How 'bout you provide me with a primary source that says you can amend an allocation formula (under the circumstances we're discussing) after the plan year is over.

Then we'll go from there.

Wait, now I remember that this was debated a while back. Here's the link for those interested:

http://benefitslink.com/boards/index.php?s...opic=27291&st=0

[Guest mjb]

Izzarelli v. Rexene Products, 24 F3d 1506 (1994). Alternatively the employer could establish a intergrated SEP plan by the date for filing the 2005 tax return instead of making contributions to the PSP. However, 100% vested contributions would have to be made for all employees with service in 3 or last 5 yrs who earn more than $450 with no exclusions for persons performing less than 1000 hrs of service. SEPS do not need IRS approval and no 5500 is filed.

[Bird]

Observation: pip did a nice job of anticipating by including the parenthetical in his question:

How 'bout you provide me with a primary source that says you can amend an allocation formula (under the circumstances we're discussing) after the plan year is over.

[Just Me]

Before you say it, I know, I know, a TAM can't be relied on. But here is a TAM that I have always taken to mean that under Code Section 411 you can't change the allocation formula after the end of the year ---> TAM 9735001. This TAM also makes it clear that the contribution is deemed to be made on the last day of the year as long as it is made by the time the sponsor's tax return for that year is filed, so the timing of the contribution will not matter.

__________________________

But that's just me and my humble opinion...